The Indian GDR markets are being viewed as a 'restrictive universe' by foreign investors with uncertainty looming large over two mega-issues.
One more medium-sized offering from a major corporate, the $50-million India Cements GDR, is likely to be delayed further with the markets yet to show a significant improvement in trends and interest for Indian offerings.
The average premium for the 62-Indian issues (based on the Skindia GDR index) has now slid sharply from the 15 per cent levels last week to 10.8 per cent by September 2.
According to senior fund managers at Jardine Fleming and Kleinwort Benson, the premium for Indian GDRs is set to fall further, closer to 5 to 6 per cent.
Observers are closely monitoring the timing of the India Cements offering.
With the expansion plans set out as long term, the funds to be raised are not for an immediate project, a FII source said. India Cements was planning to launch its issue just after the general elections.
According to Roddy Sale, director, international capital markets, Jardine Fleming India Securities, the outlook for the Indian markets was weakening, with the GDP growth expected to be plateau.
Only top quality issues will be priced at the market level or a small premium while lower quality issues will witness sharp discounts, as seen in the Kesoram GDR,'' he said. The timing for the issues would be crucial, with the pricing to be based on the last three days market trends.
The book-building process will determine the exact nature of demand.
FIIs have, however, expressed concern over the size of the investors, as the BSES GDR attracted 290 investors and the ICICI issue 180 investors, according to figures available with Jardine Fleming.
Jardine Fleming has so far managed 12 key Indian GDR offerings (over $1.1 billion). Fund managers with leading.
FIIs are, however, hopeful that the VSNL GDR could be launched in the coming weeks, once the uncertainty over the government's divestment plan is cleared.
